Ledger

What is a ledger?

A ledger is an organized record of financial transactions grouped by account. While a journal records transactions chronologically as they happen, a ledger organizes them by account—all your cash transactions in one place, all accounts receivable transactions in another, and so on.

Think of it as the organized filing system for all your financial activity.

Types of ledgers

Businesses typically use several ledgers:

• General ledger — The master record containing all accounts
• Accounts receivable ledger — Details of money owed by each customer
• Accounts payable ledger — Details of money owed to each vendor
• Cash ledger — All cash transactions

Ledgers in practice

Modern accounting software maintains ledgers automatically. When you record an invoice, it updates both the general ledger and accounts receivable ledger. When payment arrives, it updates the cash ledger and reduces accounts receivable. You don't need to manually maintain ledgers—software handles it—but understanding the concept helps you read financial reports.